Travel insurance 'rip-off' exposed

Customers urged to shop around as we reveal huge price variations. By Jeremy Skidmore.

By Jeremy Skidmore

12:01AM GMT 27 Mar 2004

Huge differences in the cost of travel insurance, with some sellers charging seven times as much as others for comparable policies, have emerged in a survey conducted by The Telegraph.

Travel companies and their agencies were generally the most expensive sources. The cheapest way to buy cover was directly from the insurer, either by telephone or on the internet.

Single-trip cover for a two-week holiday in Europe for two adults and two children under 14 costs as much as £164 with First Choice and £158.95 with Lunn Poly. Of the principal travel companies, MyTravel was the most competitive at £59.98, but still more expensive than the Post Office and supermarkets. The direct insurance providers Insure and Go and Travelplan were among the cheapest, as our table shows.

Our results compare policies with broadly similar cover - although customers should always check specific requirements (skiers, for example, must ensure they have cover for winter sports).

Tour operators' and travel agencies' prices are higher because they often include hefty commission on the sale of policies. The companies also argue that they provide a convenient outlet for shoppers and, if the policy is bought at the same time as the holiday, immediate cover, which protects people who have to cancel a trip through sudden illness or injury.

In addition, companies such as First Choice and Lunn Poly offer half-price or free insurance to many customers who buy holidays, depending on how much they spend.

A spokesman for the Association of British Travel Agents (Abta) denied that the companies were overcharging for travel insurance.

"Many travel companies are competitive and often give free insurance," he said. "Of course people can shop around, but it is not always such a good idea. You can walk out of a shop after buying a holiday, break your leg and be unable to travel and, if you haven't bought cover at the same time as the holiday, you won't be able to get your money back.

"Some 60 per cent of people prefer to buy from travel agencies and that figure hasn't really changed in recent years."

However, the Consumers' Association said customers were being "ripped off" by the travel trade. Kim Winter, managing editor of the Consumers' Association magazine Holiday Which?, said: "We advise people to shop around but to make sure they get the cover that fits their requirements."

A spokesman for the Association of British Insurers said: "You can save money by shopping around but people can always vote with their feet in a free market. When you buy baked beans in the corner shop it is more expensive than going o the supermarket, but it may also be more convenient."

A spokeswoman for First Choice said the company offered different levels of protection; a "silver" policy for a family of four cost £124 and a "gold" policy, with greater protection, £164.

"The majority of our customers don't pay for insurance because it is included when they buy holidays," she said. "Each person spending over £349 gets a free silver policy."

Abta insists that its travel agency members complete a formal training programme in the sale of insurance as part of its commitment to regulating the practice.

A survey last year by Holiday Which? found that only one out of 28 travel agencies questioned explained the details of its insurance cover or checked for existing medical conditions that could have invalidated the policy.